Japan begins talks with US to sound out Trump’s reciprocal tariff details

TOKYO - Japan began talks with the US to find out the details of President Donald Trump’s planned reciprocal tariff measures, as the Asian nation braces itself for potential fallout. 

Japanese Trade Minister Yoji Muto and Chief Cabinet Secretary Yoshimasa Hayashi told reporters on Feb 14 that Tokyo began communicating with Washington over the matter, after Mr Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. 

Mr Trump has singled out Japan and South Korea as nations that he believes are taking advantage of the US, according to a White House official. In the past, Mr Trump has attacked Japan’s trade surplus with the US and yen weakness that feeds into that imbalance.

This time, he is taking aim at nations that impose higher tariffs than the US, while also taking into account non-tariff barriers that countries put on America, including unfair subsidies, regulations, value-added taxes, exchange rates and other factors, according to a copy of a memo distributed by the White House. 

For Japan, the potential for fresh tariffs from the US threatens an economy that is expected to have slightly shrunk in 2024. New levies and further problems for the economy also add to the challenges for Prime Minister Shigeru Ishiba as he tries to shore up support for his minority government. 

Asked if Japan imposes higher tariffs than the US and the potential impact from non-tariff measures, Mr Muto gave a generic answer and steered clear of a direct response. 

“We need to find out the specifics as soon as possible, and we have to start by listening to the US government’s thinking on this,” he said. “We’ll respond appropriately so we can continue to develop the US-Japan economic relationship while also being in line with our national interest.”

One estimate shows Japan’s tariff rate is higher than the US’, which could mean Mr Trump will target Tokyo. 

Japan’s tariffs on all imports from the US average 3.2 per cent in 2025, compared with the 1.4 per cent that the US levies on Japanese goods, according to estimates by Professor Kenichi Kawasaki at the National Graduate Institute for Policy Studies. Lowering Japanese tariffs rather than raising US ones may make sense strategically for Mr Trump, according to Prof Kawasaki.

“Japan doesn’t export many agricultural products to the US, so even if tariffs are raised, that won’t increase US agricultural production,” Prof Kawasaki, a former Cabinet Office director for the economic outlook, said in an interview before Mr Trump’s Feb 13 announcement. “It’s clear it would be better to get Japan to lower its import tariffs, rather than the US raising theirs.”

In 2024, Japan exported 213 billion yen (S$1.9 billion) of food items to the US, which amounted to just 1 per cent of Japan’s total shipments to the nation. At the same time, Japan imported 1.8 trillion yen worth of food items from the US, which accounted for 14 per cent of overall imports from the nation. 

The tensions over tariffs belie the friendly tone that Mr Ishiba struck with Mr Trump earlier in February during their first in-person meeting, when he appeared to come away from the meeting with no concrete tariff threats. 

This week, Tokyo asked Mr Trump to exclude Japanese companies from his fresh 25 per cent tariffs on steel and aluminium to be effective from March 12. 

Any additional tariffs on Japanese cars shipped to the US would be a blow to Japan. Japanese carmakers are also wary of potential impacts from further tariffs that Mr Trump has proposed and so far delayed against Mexico and Canada – major Japanese automakers have production facilities in those countries.

“For many years, the US has cited Japan’s non-tariff barriers to automobile imports, such as the vehicle inspection system, as the reason for the lack of growth in US auto exports to Japan,” Mr Takahide Kiuchi, executive economist at the Nomura Research Institute, wrote in a note. “If the target of the tariff is extended to automobile exports to the US, the impact on the Japanese economy will be significant.”

In 2024, car and car parts made up a third of Japan’s shipments to the US, while they accounted for only 1.6 per cent of Japan’s total imports from the US.

During his first term, Mr Trump threatened to raise tariffs on Japanese cars, which Tokyo dodged in a trade deal while it gave US farmers greater access to the Japanese market.

In December, Japanese Foreign Minister Takeshi Iwaya said Tokyo intends to resume trade talks with Mr Trump with an understanding that the elimination of tariffs on cars and auto parts will be on the agenda. BLOOMBERG